Legislation developments across the US - overview

26 March 2011 by CasinoListings

The first quarter of 2011 has arguably seen more action in the United States around the legalisation of online gambling issue than at any previous time, with proposals aplenty in both state and federal legislatures.

At the federal level - the route most favoured by large brick-and-mortar gambling groups, and undoubtedly the least complicated in legislative terms - the House of Assembly has seen the re-introduction of Congressman Barney Frank's proposal to federally regulate online gambling, now re-titled HR 1174. The new bill is essentially the same as the old bill, which passed the House Financial Services Committee last year but inexplicably stalled and had progressed no further when the House adjourned.

Frank has bi-partisan support from the eloquent Californian representative John Campbell, along with other respected politicians Ed Perlmutter (D-Colo.) and Peter King (R-N.Y.). Last year the bill attracted 70 co-sponsors and sailed through the House Financial Services committee on a strong positive vote; that may prove more difficult this year with the Alabama Republican representative Spencer Bachus - a longtime opponent of online gambling - in the chair.

Campbell says: "Clearly, Americans want to gamble on the internet, and policymakers need to provide both the freedom to do so, as well as ensure that appropriate consumer protections are in place. Regulating online gaming and making certain that these sites are operating legally in America will also create economic growth through generated tax revenue and the possibility of attracting foreign players to U.S. sites."

2011 has also seen a number of attempts at state level to legalise online gambling or online poker.

Individual states in the Union retain the right to make and pass their own internal state laws, and this right has been exercised recently by states like California, New Jersey, Florida, Iowa and most recently Hawaii which have all been the setting for new or resurrected legalisation bills.

Perhaps the most notable of these was a New Jersey proposal driven by Sen. Ray Lesniak, which sought to legalise intrastate online gambling. The bill made remarkably fast progress through committee, House and Senate stages, being carried by significant majority votes, and it looked like a done deal when it was forwarded to New Jersey Governor Chris Christie for signature into state law.

After cogitating on the bill for the maximum allowed period, Christie dampened the hopes and enthusiasm of the bill's supporters by invoking legal and constitutional concerns and exercising his absolute veto, meaning that the proposal will have to be put to a referendum of New Jersey residents that will probably not take place until later this year.

Sen.Lesniak has proved to be a tenacious and determined man, however, and he has pledged to rework the bill as soon as possible to clear up Christie's concerns and get things moving again. Lesniak has also pushed strongly for legalised sports betting in the Garden State.

A proposal to legalise online poker also emerged from the gambling state of Nevada, where over a decade ago state approval for online gambling was achieved, only to be shelved, reportedly due to federal legality concerns.

Last year the influential Nevada Senator Harry Reid launched an abortive federal attempt to legalise online poker, which appeared to simply run out of steam before any significant progress was achieved.

This year, state politicians have taken up the initiative despite brick-and-mortar operators' preference for a federal law.

AB258 was introduced to the House this (March) month by the chair of the Judiciary Committee, Assemblyman William Horne, and it has already been the subject of discussion as the committee explored its benefits and options through expert testimony from several interested parties. As at going to press, there was no news on the outcome of the two-and-a-half-hour committee session and where AB 258 goes from here.

The bill is backed by online poker giant Pokerstars, which has hired some impressive political and lobbying talent to drive the initiative with Horne, and it contains provisions that would prevent the licensing authorities from excluding applicants on the basis of their past involvement in the US market post-UIGEA....like Pokerstars. Opposing the bill due to a preference for a federal solution are land giants like Caesars and MGM.

Interestingly, Pokerstars has also partnered with the Wynn Resorts land gambling group in a federally-focused internet poker legalisation quest as well, an indication of how seriously the legalisation issue is regarded by the online poker provider, which is clearly hedging its bets.

In California, a strong intrastate drive toward legalisation of online poker has seen Californian land card rooms and tribal gambling interests partnering in efforts to corner what could be a very lucrative market.

Two proposals are vying for the support of lawmakers, one by Sen. Rod Wright and the other by Senator Lou Correa. The race appears to be going in favour of Correa's SB40 at present, with major alliances like CNIGA and COPA and card rooms supporting his more restrictive and commercially protectionist licensing proposal, but the issue has yet to enter true legislative debate. It is likely that the next move will entail a Senate Governmental Organization Committee hearing.

Gov. Jerry Brown has taken no position on the bills, whilst Parke Terry, lobbyist for Poker Players Alliance, says the two Senate bills would restrict competition by barring poker players from using foreign websites.

In Iowa, a bill seeking to legalise online poker and proposed by Sen. Jeff Danielson has been temporarily stopped in its tracks at the committee stage whilst lawmakers seek a better understanding of the subject, and the proposal is tweaked.

Danielson's "Iowa Internet Poker 32 Consumer Protection and Revenue Generation Act of 2011" moved easily through the State Government Committee in the Senate, and enjoyed a 4 to 1 passage through a Senate Ways and Means sub-committee, only to stall in a meeting of the full Ways and Means Committee as members grappled with issues around underage and addictive gambling with which they appeared to be unfamiliar.

With an April 1 procedural deadline looming, Danielson is trying to keep his proposal alive as committee chairman, Sen. Joe Bolkcom, observes that there is case for more information and a few tweaks." People needed more time to work through it," he said.

Meanwhile, Governor Terry Branstad indicated that while he does not advocate an expansion of gambling, he will not veto the legislation if it passes, and a local newspaper commissioned a poll which surprisingly showed that 73% of respondents were not enamoured of the idea of legalised online gambling.

In Florida, another intrastate legalisation of online poker bill is on the legislative agenda, introduced once again by Rep. Joseph Abruzzo. His "Internet Poker Consumer Protection and Revenue Generation Act of 2011 would licence the state's 23 pari-mutuels - horse and dog racing tracks and jai alai frontons - under strict and protectionist conditions within the Sunshine State to operate online poker on an intrastate internet poker network.

Sen. Miguel Diaz de la Portilla, a Miami Republican, is a co-sponsor for the bill, which would allow an Internet hub operator based in the state to pay a $500,000 application fee to the state for a licence. Operators would pay the state a 10% gross monthly receipts tax. The 42-page SB812 includes provisions aimed to combat money-laundering, gambling addiction and underage opportunists, and made good progress earlier this month, passing through the state Senate Regulated Industries Committee on a positive 10 to 2 vote.

The state of Hawaii popped up on the online poker legalisation radar screen this month as well, with an intrastate online poker legalisation proposal titled SB755.

The bill justifies legalisation by highlighting the need for enhanced tourism and business attractions in the wake of the Japanese earthquake and tsunami, and calls for the establishment of a Peer-to-Peer Gaming Commission effective July 1, 2012. This Commission will fall under the authority of the Department of Economic Development and Tourism and consist of a 7 member body serving five year terms, supported by an executive director and appropriate staffing levels.

It has been proposed that the legislation be effected through an amendment to the Hawaii Revised Statutes as a Peer-to-Peer Gambling law. The authors of the bill may be a little ambitious in costing the two operator licenses envisaged by the bill at $100 million and a further 20% of total wagers in state tax, however.

The bill made a fast transition through the House Committee on Economic Revitalisation and Business this week and is now scheduled for a further hearing before the Committee on Judiciary.

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